>>Advantages: This larger pool of work enables client and firm to better manage
and “cover” or “self-fund” individual outlier matters where the activity and budget
assumptions proved to be off. It also provides the firm with a greater incentive to help
the client reduce legal risks and problems since the firm is paid to service a portfolio
(e.g. HR and employment litigation) and can make more by preventing problems rather
than rationing services. In fact, many clients build in an explicit provision linking outside
counsel’s compensation to maintaining or decreasing total liabilities paid in connection
with that portfolio of work.

The assigned firm often pays local counsel and manages vendors under thisarrangement. To successfully execute a portfolio fixed fee, the client must performdue diligence, including assess 2-3 years of historical data on: scope of work, fees paid,outcomes / liabilities / recoveries.These engagements also commonly provide for separate ways to address “one off”matters outside the normal scope of the portfolio (e.g. class action lawsuit), and alsoprovisions to verify that scope / activity assumptions proceed as planned.

>>Drawbacks: Properly implementing portfolio fixed fees requires time and effort to
analyze historical data regarding matter activity and spending patterns. It also requires
an assessment of how repeatable these patterns will be in the coming year or two.
Not everyone is equally comfortable with making such projections and committing in
advance to assigning to a single law firm.